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<br />Rate Covenant: The City covenants to cause to be established, charged and <br />collected such lawfully established rates and charges for the services provided by <br />the Public Utility so that net revenues (i.e. gross revenues derived from said rates <br />and charges less all costs of operation and maintenance, exclusive of debt service <br />and depreciation) will be sufficient to pay at least 110% of the average annual <br />principal and interest coming due on all outstanding bonds each year. <br /> <br />Because the cash flow of the electric utility is very strong, the covenants do not <br />pose a problem for the City. <br /> <br />Marketing Issues: <br /> <br />We propose to sell the bonds non-rated. Because these are not general obligation <br />bonds, the City's rating from Moody's does not apply. We can ask Moody's to <br />give us an indication on what the rating would be for the electric revenue system <br />without cost. The City would have a choice of rejecting the rating or utilizing it <br />for this bond issue. Once a rating is received, however, it would be necessary to <br />rate all subsequent electric revenue issues. <br /> <br />Because the City expects to issue less than $10,000,000 in tax-exempt <br />obligations in 2006, the Bonds will be bank qualified, which carries a slightly <br />lower interest rate. <br /> <br />Schedule: <br /> <br />Pre-Sale Report and Call for Sale: <br />Distribute Official Statement: <br /> <br />January 9, 2006 <br />Week ofJanuary 23,2006 <br />February 6, 2006 <br /> <br />Utility Commission Approval: <br />(Special Meeting) <br />City Council Resolution Approving <br />Sale of the Bonds: <br />Estimated Closing Date: <br /> <br />February 6, 2006 <br /> <br />Week of February 27, 2006 <br /> <br />Attachment: <br /> <br />Resolution authorizing Ehlers to proceed with bond sale <br /> <br />Ehlers Contacts: <br /> <br />Bond Analysts: <br /> <br />Mark Ruff (651 )697 -8505 <br />Sid Inman (651)697-8507 <br />Bruce Dejong (651) 697-8548 <br />Diana Lockard (651) 697-8534 <br />Debbie Holmes (651) 697-8536 <br />Connie Kuck (651) 697-8527 <br /> <br />Financial Advisors: <br /> <br />Bond Sale Coordinator: <br /> <br />The Official Statement for this financing will be mailed to the Council Members at their home address for review <br />prior to the sale date. <br /> <br />. I ~A~t~I~E~I~ <br />